Monday, January 17, 2005

Bohai Bay update

Update on the China post regarding the potential large oil discovery in Bohai Bay. I finally found some analysis here, but note I had to pull the info out of the Google cache because the orginal article appears to have been scratched off the hard drive. So an extensive quote seems in order:

BEIJING, Dec 24, 2004 (Kyodo via COMTEX) -- Large offshore oil reserves have been found in Bohai Bay in China's northeast as the country scrambles to keep up with soaring energy needs, China's state media reported Friday.

Exploration teams have found the Bohai Bay Basin in the innermost gulf of the Yellow Sea may contain 20.5 billion tons of reserves, with 9 billion tons already proven, according to the China Daily.

Analysts said while the discovery was good news for China, questions remain about whether that will lead to actual large-scale production.

"The amount is substantial," said Michael Lee, analyst at UOB Kay Hian (Hong Kong) Ltd. "But the question is actual production, in terms of technology as well as cost effectiveness."

The paper quoted the president of a research institute linked to China Petroleum and Chemical Corp. as saying the basin's total oil resources could potentially sustain the country's energy needs for some time.

There you have it, with all the keywords highlighted to go find it yourself. Key phrase, emphasis mine, is cost effectiveness. In other words, is the energy cost to extract this bounty of oil less than the amount of energy produced, leading to a net postive? And how is the overall reserve picture affected by the actual net production?

Also, as far as I know proved reserves for this site remains at 67 Gb, or about 2 years world supply. I found a few references to wells in this region producing 40k barrels a day, but that is all I can tell you since I lack the neccesary subscription to some of the "heavy" oil and gas sites.